Why Denver still needs a CFO

Auditor should cool rhetoric

Published July 15, 2006 at midnight

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Losing track of something worth $375 million - as the city of Denver did with the new convention center hotel authority when it drew up its financial statements for 2003 - is pretty persuasive evidence that the city's financial management should be brought into the present century.

Denver's outside auditing firm, KPMG, has documented a number of weaknesses in the way the city manages its money, including the decentralized preparation of financial reports that led to the temporary omission of the hotel from the city's balance sheet.

KPMG suggested that Denver consider adopting a different financial structure, and a mayoral task force has been working on possible changes since May. They are expected to propose that the city appoint a chief financial officer with oversight responsibility not only for budgeting and revenue collection, which are currently done by the mayor's office, but also payroll, accounting and financial statements, which are the city auditor's responsibility now.

That idea doesn't sit well with Denver's elected auditor, Dennis Gallagher. He is generally supportive of having a CFO, but doesn't think these tasks should be transferred away from his office, saying it would weaken "the very necessary checks and balances in the city as defined by our charter."

Gallagher's concern, in part, is that his office's job of verifying that requests for payment vouchers are correct and complete might be compromised if given to a CFO who serves at the pleasure of the mayor. We tend to think that the quality of such work mainly depends on the competence and integrity of the individual regardless of whether he or she is elected or appointed.

Yes, the question of checks and balances needs to be carefully considered any time a proposal changing the charter is drafted. But the biggest check on unbridled mayoral power is the auditor's ability to conduct performance reviews of city agencies. As it happens, no one is suggesting Gallagher's office be stripped of that responsibility. Presumably, any changes would even allow the auditor to focus more intently on such performance audits.

Gallagher's complaint might be more credible if he weren't at the same time accusing his critics of ulterior motives. "I am also aware that there are some of you, involved with the work of this committee or who have made presentations to the committee, that were very disappointed that the voters chose me to be auditor. . . . I am also aware that some of those same individuals have been making very critical comments about the auditor's office - for the purpose of garnering more power - and me personally," he said.

Such personal attacks are beneath Gallagher. Surely he knows that critics of the city's financial structure have argued for at least two decades that the auditor's office in its present form makes little sense in the modern era.

Whatever recommendations the task force eventually makes, which could range from charter changes on down to reorganizations that could be accomplished by ordinance or even by executive order, they will need extensive and detailed discussion and analysis. So Gallagher himself says, and we're with him on that.

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